Crisis in Black Nonprofits: Worries abound about leadership and funding

On Sept. 26, 2007, representatives from more than 100 of the nation’s leading African-American social justice, advocacy and membership organizations assembled at Washington, D.C.’s Convention Center for what was billed as “a critically important dialogue on the leadership crisis facing the nonprofit, African-American community.” For two hours on that day, expert panelists from the academic, foundation, human resources and public sector communities led a discussion of strategies that are being sought to retain the current generation of African-American nonprofit leadership and to cultivate the next generation’s leadership.

The conference was organized by Nonprofit HR Solutions L.L.C., a human resources consulting firm operating exclusively in the nonprofit sector. “Nonprofits need specialized expertise. The types of solutions used at multinational, for-profit corporations, for instance, can’t simply be imposed on mission-driven organizations,” says Lisa Brown Morton, the firm’s president and CEO. “Your mission, your outcomes, the way you think and plan for the future — all this depends on the people working with you to achieve your goals. In the nonprofit environment, this principle comes into sharp focus,” she says. Nonprofit leaders require more nonprofit-specific skills and experience, Morton notes. They need to be adept at managing multiple and often conflicting priorities — management, fundraising and advocacy, for example — and constituencies — board members, employees, the public, funders, etc., she explains. “Their skills have to include decision making, resource management, strong administration, great communication, vision and passion,” she adds.

Small and medium-sized nonprofits in general, where most of the African-American organizations fall, are particularly affected by the leadership crisis. According to “Daring to Lead 2006,” a study based on a survey of nearly 2,000 executive directors in eight metropolitan areas throughout the United States, relentless fundraising pressure, weak boards of directors, low salaries and lack of management support are causing many executive directors of small to mid-sized nonprofit organizations to leave their jobs. Three out of four nonprofit executive directors are likely to leave their jobs within the next five years, the survey showed.

The survey, conducted by Com-passPoint Nonprofit Services of San Francisco and the Eugene and Agnes E. Meyer Foundation in Washington, D.C., focused on community-based, locally focused nonprofit organizations in Boston, Chicago, Dallas, Los Angeles, Minneapolis/St. Paul, Sacramento, San Francisco and Washington, D.C. It revealed executives’ deep anxiety about fundraising and the financial sustainability of their organizations and highlighted several other challenges that may affect the ability of nonprofit organizations to recruit new leaders to replace those who are leaving. For example, most executives believe they have made a significant financial sacrifice to work in the nonprofit sector and believe their successors will need to be paid substantially higher salaries. Executive directors who were very dissatisfied with their compensation were twice as likely as other respondents to be leaving within a year. And with baby-boomer-age leadership leaving the work force, nonprofits will be forced to scramble even more for talent, adds Morton of Nonprofit HR Solutions.

Bill Merritt, executive director of the National Black United Fund, in Newark, N.J., contends there also is a financial crisis in Black nonprofits. His office oversees 14 local Black United Funds and 29 nonprofit organizations with membership in at least 15 states as a part of the National Black United Charities Federation. “Nonprofit organizations have served as vehicles for community empowerment and civic participation in the Black community by addressing issues of access and inequality. The lack of financial resources available to minority-led nonprofit organizations that promote the interests of their communities is a crisis,” he says.

With public funding cuts, minority-led nonprofits face the additional challenge of serving a population that has fewer financial resources to contribute to organizations that serve them. Moreover, recent studies show that foundation grantmaking for ethnic minorities is low and is not growing at the same rate as overall giving. “Although foundation funding is only a small portion of funding, many nonprofits serving diverse communities depend on this source of support for survival,” says Renee Branch, director of diversity and inclusive practices at the Council on Foundations, a Washington, D.C., association of more than 2,000 grantmaking foundations and corporations.

Clearly, the needs are outgrowing nonprofit resources, says Elizabeth T. Boris, founding director of the Center on Nonprofits and Philanthropy at the Urban Institute. “Because of their invaluable role to nonprofits, thus the community, we should be concerned about how grantmakers are serving their total constituencies,” she says.

For African-Americans, the challenge of leadership goes beyond their own nonprofit organizations to the broader nonprofit arena, where African-Americans are underrepresented at leadership level. The African American Nonprofit Network, which identifies African-Americans for leadership and advisory positions in the nonprofit sector, points to several recent national studies which found that most nonprofit organizations lack diversity among their management and boards, despite increased emphasis on racial and ethnic diversity in recent years. Two of those studies, “Daring to Lead” and “Nonprofit Governance in the United States,” which was conducted by Francie Ostrower for the Urban Institute, found that just 7 percent of nonprofit executives and board members are African-American, while more than 80 percent are white, non-Hispanic. The “Daring to Lead” study found that 82 percent of executive directors were white, that recently hired executives were just as likely to be white as their longer-serving colleagues and that executive directors under 40 were only slightly less likely to be white.

The African American Nonprofit Network itself was created in 2006 out of concern for the acute shortage of African-American management and leadership talent in the nonprofit sector, especially in organizations serving children, youth and families. That concern led Venture Philanthropy Partners, which concentrates investments of money, expertise and personal contacts to improve the lives and boost opportunities for children and youth of low-income families in the Washington, D.C., area, to commit up $500,000 to launch and grow the network. Maxine B. Baker, retired as president and CEO of the Freddie Mac Foundation and vice president of community relations for Freddie, was named president of the network in February. “Minority-led nonprofits in which minorities define the mission and guide the strategic direction of the organization’s activities transform communities by ensuring that those who speak for the community can relate to the community they represent,” she says. “Diversity is about effectiveness.”

Baker expects to create a directory of nonprofit minority leadership and suppliers later this year.

Worries about talent acquisition and fiscal stability in the African-American nonprofit community come as the nonprofit industry as a whole faces a growing challenge of finding funding and new donors. Industry research shows more than 1.4 million nonprofits in the United States and a decreasing number of donors. In a 2007 survey of the North American nonprofit industry, 80 percent of those surveyed rated retaining current donors as “extremely important” to their operations. While 74 percent of the respondents rated their performance in retaining current donors as “very good” or “good,” only 46 percent of them rated their performance in recruiting new donors in the same way.

The “2007 State of the Nonprofit Industry Survey” was conducted online from July 17 to Aug. 11, 2007, by Blackbaud Inc., a supplier of software specially designed for nonprofit organizations. Of the 1,140 respondents, 69 percent were in executive/management or fundraising positions and 38 percent were from organizations with $1 million to $4.9 million in revenue.